Gains and Costs When an Ethanol Plant Moves into Town

Source: University of Illinois | Mar 10, 2009

When a small city or town considers adding an ethanol plant or biorefinery to their community, often times it’s the financial and property capital that’s counted. But what are the cultural and social effects on the community? That’s what University of Illinois Professors Gale Summerfield and Stephen Gasteyer and graduate student Keith Taylor are analyzing in two real-life cases in Illinois.

Palestine is a small community with a population of about 1,300. The Lincoln Land Ethanol plant opened in 2004. Summerfield and Gasteyer have been comparing and contrasting the issues this town faced and the effects the plant had on this community with other communities where ethanol plants have been sited, including a proposal by The Andersons for an ethanol plant in Champaign.

They use a framework that looks at gains and costs from many different angles. “We use what’s called the community capitals framework for examining the effects on community development, capacity, resiliency, as well as global linkages, not just the financial effects,” Summerfield says.

For example, water is natural capital. “Water is really important with ethanol plants because you have to have a source nearby and what came up in the comparison study is that in some places the water source was perceived as more threatened and in other places it wasn’t,” Summerfield says. Palestine’s water source is a river, but in Champaign, water comes from the Mahomet aquifer and became a major concern, playing a role in eventually putting the project on hold.

Looking at the cultural capital has to do with the legacy of the community. “We have this sense of community and history – what’s accepted, what’s valued in common, what’s expected. Palestine is a tiny farming community so there is less diversity and more uniformity of heritage,” Summerfield says. It wasn’t a stretch for them to add a refinery to the community that would help farmers.

In comparison, Champaign is a much bigger community with many different kinds of cultural heritage. “Ties to the farming community are there, but there are also a lot of people who aren’t tied so you see that in the opposition to the plant coming in.”

Summerfield studies gender issues in her research and noticed some striking differences there, as well. “Energy isn’t an area that you typically see a lot of women. But in Palestine, the mayor is a woman and the chair of the ethanol board of managers is a woman. Women are often more involved in alternative energy rather than the petroleum industry, so in the case of Palestine, the women involved brought balance, looking at how it would benefit the community.”

How the plants would affect the job market in the two communities was also a point of contrast. “An ethanol plant only hires about 35 people, which isn’t a lot, but for a really small community like Palestine, that’s bringing in jobs that are geared toward people with more training, which can benefit the community as a whole,” Summerfield says.

Summerfield also examined some of the differences in the political climate of the two communities and how the plant has helped Palestine financially, although she says that with the excess of capacity of ethanol right now combined with the plummeting price of petroleum, it has not been a good year for alternative energy of any kind. “There’s so much volatility that it’s very hard for small groups and communities to deal with this,” she says. “And when you’re dealing with a co-op situation like in Palestine, it’s good when times are good and the benefits come back to the community. But when times are bad, you don’t have the diversified base that you would if you were a larger company.”

Summerfield found the most remarkable differences in what she calls “social capital.” This aspect has to do with networks and interactions between people. For Palestine, time will tell whether they will be able to make connections with groups throughout the state and nationally. The recession has affected the potentials for entrepreneurship there. “There might have been byproducts or other businesses like local development groups who could give small loans to start up businesses,” she says.

“Using the community capitals framework, you look at a much more systemic approach to communities rather than one little piece,” Summerfield says. “The shortcoming is that you can’t really evaluate which one is more important than the other unless you assign a value to one so it’s not going to give you a clear cut answer when you’re comparing one community to another. But, within one community it can help you see that it’s not just one thing that’s happening.”

She says that she likes to think that this methodology could help bring several capitals together and see how it can help the sustainability of communities. “I’m concerned that we’re not encouraging the building of the next generation of rusted out infrastructure – you want to have a longer-term view so these communities don’t get a couple of years of gain and then 10 years of cost.”

The next step will be more in depth interviews in the communities. Funding for the preliminary research was provided by the University of Illinois.